Positive, but Insufficient Projections

The Central Bank estimates that Costa Rica's economy will increase by 3.2%, mainly because of private consumption and a rebound in public investment.

Wednesday, January 30, 2019

According to the Central Bank's 2019-2020 Macroeconomic Program, the Costa Rican economy will increase by 3.2% in 2019 and by 3% in 2020.

The authorities consider that economic growth in 2019 will be boosted by private consumption, reflecting the increase in confidence after the approval of the fiscal reform and the impact of the improvement in the terms of trade on disposable income, and by government consumption (recovery effect after the strike).

In addition, public investment is expected to rebound strongly this year, especially for projects such as the extension of route 32 and works included in the Transport Infrastructure program. Total private investment is expected to moderate because of the slowdown in construction growth, but other forms of private investment are expected to recover because of increased confidence and a moderate acceleration in credit to the private sector.

Although Costa Rican production is expected to increase in the next two years, this is not enough for the country's needs, because according to the business sector it is urgent to reactivate the economy and with 3% growth is not possible.

You may be interested in "Inflation in Costa Rica: What to expect in 2019"

In a statement, the president of UCCAEP, Gonzalo Delgado, said that "... projected growth is not enough, when what is being done is to reactivate the economy and have a higher tax collection that helps reduce the fiscal deficit and For this, it also requires greater efficiency of the State to overcome that figure."

See Macroeconomic Program 2019-2020.

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In the first quarter of the year, household final consumption and private construction investment accounted for most of the annualized 3.4% increase in GDP.

From a report by the Central Bank of Costa Rica:
In the first quarter of 2017, economic activity, measured by the cycle trend of the real Gross Domestic Product (GDP), grew at an annualized rate of 3.4%, mainly reflecting higher final household consumption expenditure and to a lower extent, an increase in investment in private construction, since external demand showed a moderation in its growth.

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